BofA expects $ 100 billion in electric vehicle IPOs by 2023

A global push toward electrification is sparking a wave of initial public offerings in the world of electric vehicles that could raise about $ 100 billion through the end of 2023, according to Bank of America Corp.

Increasing investments in the sector, ranging from batteries to car charging, would lead to spin-offs of corporate units and public listings, he said. Patrick Steinemann, Co-Director of Investment Banking for the Global Mobility Group at Bank of America.

“We’re already on a wave where up to $ 100 billion in IPO earnings will be raised in the electrification space, across the entire EV, battery and charging value chain.Steinemann said in an interview.

The largest initial public offering of 2021 comes precisely from that sector. Electric truck maker Rivian Automotive Inc. raised $ 13.7 billion on its U.S. listing earlier this month and is up 47% from its offering price.

Electric vehicle makers became investor favorites last year, and their stocks have seen impressive rallies amid bets on growing demand for cleaner cars. Tesla Inc., the industry leader, has nearly doubled in value over the past year and billions have been raised through initial public offerings and follow-up stock sales.

Last month, the Chinese car and battery maker BYD Co. raised $ 1.8 billion in a Hong Kong share placement, its second such deal this year. In January, the Warren Buffett-backed company raised another $ 3.9 billion through the sale of new shares.

The growing demand for electric cars will lead to increased investment by companies that make batteries for clean vehicles.

The top 10 battery manufacturers are expected to nearly triple their manufacturing capacity by 2022 to meet future supply commitments and position themselves for an upcoming surge in demand, according to BloombergNEF.

“Battery companies will become a universe of their own; are now entering a stage where massive capacity build-up requires a lot of capital to keep up with growing demand for electric vehicles”, dijo Steinemann. “Until now, battery companies have been financed largely with debt, but the next stage of their growth will be financed through a wave of IPOs.”.

One of the largest IPOs to come out of Asia next year, and potentially globally, will be the spin-off of the battery unit. LG Energy Solution from LG Chem Ltd. in South Korea, which could raise about $ 10 billion. It is one of the largest battery manufacturers in the world after Contemporary Amperex Technology Co. of China.

LG Energy Solution It resumed the IPO process after reaching an agreement on the recall of Chevrolet Bolt electric vehicles from General Motors Co. in October. It plans to present the IPO prospectus in early December.